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Employment Law Services — Employers

Employee resignations

All employers, no matter how good they are, will have to deal with an employee resignation. Whatever the reason, it is important to handle every resignation professionally.

  • Should you try and persuade the employee to change their mind?

      You cannot refuse to accept someone’s resignation. However, if an employee resigns verbally in the heat of the moment, you should give them an opportunity to change their mind in order to avoid a constructive dismissal claim. Secondly, if an employee resigns to move to another job and they are a valued employee, you might want to have a discussion with them to see if you can persuade them to stay. Unfortunately these discussions are often unsuccessful or the employee leaves shortly afterwards, as they have already decided to go.

  • Issues to think about before employment ends

      Here is a checklist of the issues you should address while the employee is still employed:

      • Make sure that the employee has put their resignation in writing, giving the right notice period. You may need to check their contract to see what this is.Consider whether the move is likely to breach any of the terms of the employee’s contract.
      • If they are moving to a competitor, are there restrictive covenants that you might want to enforce? If so, you need to take advice quickly.
      • Agree when their last day at work will be.
      • Decide whether the employee should work their notice period. If you are concerned about them poaching customers or staff, you can pay them in lieu for all or part of their notice period or put them on garden leave. This is where they remain employed and paid, but stay at home rather than coming into work. This ispossible as long as their contract of employment allows for this or the employee agrees.
      • Agree what will be said to customers and other employees about the employee’s resignation.
      • Decide whether you want the employee to take any outstanding holiday during their notice period.
      • Consider how you will fill the gap: will you recruit externally or cover the work internally?
      • Conduct an exit interview to establish why the employee is leaving Find out what you can do to improve as an employer and address any issues that are highlighted.
      • Ensure that a proper handover takes place.
      • Organise a leaving collection and party.
  • Issues to address on termination of employment

      When the employee leaves, you will need to:

      • Retrieve all company property such as company car, laptop, mobile, security pass, keys, uniform and tools.
      • Ensure the employee hands over all company documents and copies.
      • Terminate their access to the computer network and telephone system.
      • Stop their membership of any benefit schemes, such as pension, life assurance and private health insurance, unless you have agreed otherwise.
      • Organise a final payment to the employee, including any outstanding pay or pay in lieu of notice, accrued holiday pay, overtime, bonuses and commission. You can deduct money from the final payment if the employee has taken more holiday than they have accrued.
      • Pay any outstanding expenses.
      • Remind the employee about any restrictive covenants that might affect what they can do after they leave their job and any confidentiality clauses that are in their contract of employment. Check that they understand what is expected and the consequences of any breach.
      • Issue a P45.
      • Think about what you will say in any written or verbal references.
  • Is a compromise agreement needed?

      If you think it is possible that the employee will bring an employment claim after they leave, you should consider negotiating a financial settlement and entering into a binding agreement that will prevent the employee from bringing any claims. This is currently known as a compromise agreement but it is due to be renamed as a settlement agreement from summer 2013. The employee has to take independent legal advice on the agreement and it is usual for the employer to pay reasonable costs for this. ACAS can help you settle any possible claims through their pre-claim conciliation service.